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Is Ethereum a good investment?

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The rise and growth of the revolutionary and second biggest cryptocurrency, Ehtereum (ETH), made a lot of people asking questions such as “Should I invest in Ethereum or not?”, “If it’s worth investing, where should I buy Ehtereum?” and “Is Ethereum a good investment in general?”. In next several paragraphs, we will try to resolve all your dilemmas and give you some guide lines in order to better understand the current status of this important digital currency.

What is Ehtereum?

Ether is the cryptocurrency for Ethereum, which is a decentralized platform that can execute peer-to-peer “smart contracts”. Since late 2016 and as a result of an attack to the DAO, Ehtereum was split into two: Ethereum (ETH) and Ethereum Classic (ETC). It was created by Vitalik Buterin and launched in mid-2015. After the successful launch to the digital market, this platform was considered to be the next generation cryptocurrency and decentralized application platform.

It has a market cap of around $1.1 billion. Peer-to-peer smart contracts are what Ethereum is known for, aside from the mentioned cryptocurrency. It enables users to code and enact contracts without any third party. Ether is mostly known for being the first alternative to Bitcoin.

What is Ether (ETH)?

Ehter is the cryptocurrency of the Ethereum network, which differs significantly from Bitcoin and other altcoins, as it wasn’t created as a digital currency for financial transactions, but rather as the fuel that powers the Blockchain technology. It means that anyone who uses the computing power to validate transactions or to support the development of the Blockchain is being rewarded with Ether. It can be said that it is similar to Bitcoin mining. On the other hand, those who wish to execute specific operations on the Ehtereum blockchain need to pay with Ehter in order to do it.

The ETH represents the chain that has implemented the hard fork in order to reverse the famous DAO hack. The alternative to ETH, called Ethereum Classic, carries the ticker ETC and it runs on the older Ehtereum blockchain, before the hard fork, acting as if DAO hack never happened.

Another important difference between Ether and Bitocin is that ETH was made in a different way. The first batch of Ether was created as a part of a crowdfunding effort in 2014. The presale of this currency created 60 million Ethers for the supporters of the project and another 12 million to the Ehtereum development fund. Furthermore, 5 Ethers were created for each block that has been mined. It means that the initial supply of Ether was 72 million. The upper limit says that up to 18 million Ethers can be created per year.

The ETH price development

As the cryptocurrecny wallets are quite anonymous, it is very hard to tell when the demand for some digital currency will grow and even harder to predict when the price will rise or fall. Since the Ether became tradable in mid-2015, its price has seen a substantial volatility. In the first quarter of 2016, it had a steep rally, going from under $1 USD to more than $10 USD by early March. Ether hit the record of $21.50 in April, but at that time the DAO hack has happened and the amount worth $50 million was stolen.

Due to that huge crash, the price of Ether halved within hours. Since then, the price of Ether varied from $10 to $15 for a long time. After the period consolidation, the price started to rise again. Since the 50% Fibonacci hold in December 2016, Ether price continued to rise, going from the low $7.00 to more than $50.67 in March 2017. In April, it hit the record of $79.80, but it wasn’t the end of this rally. In May, the price continued to rise endlessly, hitting the final all-time record in June, which was $394.66 at the time of writing this article. This cryptocurrency currently has the best period in its brief history.

So, what was the reason for this unbelievable rally of ETH? Well, many experts mention various reasons, such as the growth of demand, investment demand rising, the support of large corporations, its technological power, and its network effects.

Investing in Ethereum

We all know how risky are all digital currency investments in general, but if you wish to invest in Ehter, you must have the optimism. You must be one of those who believes that this whole Ehtereum project will succeed and will play a major role in industry and technology in the upcoming years and decades. The price of ETH should rise even more if the Ethereum blockchain continues to be largely used to create smart contracts and decentralized apps.

As the successful investor and trader for 20 years, Ken Liu says: “Even though the price of Ethereum has already appreciated significantly in 2017, there is still a 10x, maybe even 100x long-term upside from current levels.” According to Liu, Ethereum hasn’t come to mainstream adoption yet, but there are hundreds, possibly thousands of applications in development. He claims that many of these new applications aim to make Ethereum more accessible and user-friendly. As all these new projects come online in the upcoming years, millions of people will be introduced to Ehtereum, and its value could quickly rise to even $1000 USD.

Ken Liu also adds: “There are currently about 1\3 as many transactions on the Ethereum blockchain as the Bitcoin blockchain, but Ethereum is growing exponentially, while Bitcoin has reached its maximum capacity for now.”  The more people use this technology, the more value and utility is will have. It is important to know that Ethereum also has the support of major global companies. That support can be easily recognized in projects such as the recently formed Enterprise Ethereum Alliance. It consists of large companies such as Intel, Microsoft, and J.P. Morgan.

Risks of investing in Ethereum

There are several risks involved when obtaining ETH as a cryptocurrency investment.

– Ehtereum network is vulnerable to cyber attacks, as it was the case with the DAO hack when the price lowered from $21.50 to $15 in just a couple of hours.

– The general supply of Ether is not fixed, so the future of supplies is uncertain, and as we all know, the price depends on the global supply and demand.

– Ether is still not the traditional sense of trading, so it cannot be used to buy goods and services yet.

– There is always a fear that Ethereum blockchain could be at some point replaced by a superior technology that has similar features, which would result in a crash of ETH value.

Future of Ethereum

The good thing for the future of Ethereum is that the members of this community have a huge respect for Ethereum’s founder Vitalik Buterin, believing in his vision. At the stage of project’s rise and development, it is important to have a strong character, a leader, because the new ideas can be implemented much easier. Ethereum also has the advantage of learning from Bitcoin’s previous mistakes and trying to avoid or prevent them on time.

The most important technology upgrades that are currently in progress now are:

– Sociability improvements

–  Anonymous transactions

– Switching from proof-of-work to proof-of-stake

– Smart contracts that can settle fees autonomously

These are just a few reasons why the future of Ehtereum seems very promising. Maybe it would be the best to buy some ETH and try to hold it for some time, avoiding all market swings for several years. Even though ETH is volatile, it doesn’t always mean it is bad. Some investors and traders made money during the most volatile periods of Ethereum.

NOTE: The author is subject to all manner of error in judgment. Do your own research, and be prepared to take full responsibility for your own trades.


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